Montreal, -- ACE Aviation Holdings Inc. (ACE) has reported operating income of $452 million for the full year 2005, despite an increase in fuel expense of $592 million or 37 per cent versus 2004. Net income for 2005 totaled $258 million compared to a net loss of $880 million in 2004, which included reorganization and restructuring items of $871 million.

"I am pleased with our accomplishments in the first full year since we've emerged from Companies' Creditors Arrangement Act (CCAA)," said Robert Milton, Chairman, President and CEO, ACE Aviation Holdings Inc.

"We took significant steps during the year in creating shareholder value by highlighting the value inherent in ACE subsidiaries…While progress has been made at Air Canada Technical Services (ACTS) in terms of developing the business as a stand alone company, more work remains to be done. The priority for the new leadership at ACTS in 2006 will be to develop the business and increase the focus on its operations, customer service and productivity to improve financial results. ACE will look for opportunities to monetize ACTS at the earliest appropriate opportunity. ACE will also continue to look for opportunities to enhance the value of other subsidiaries."

"In the fourth quarter, revenue performance was strong…but this was not enough to offset rising fuel costs. We must renew our efforts to achieve a cost structure that will allow us to remain profitable in an environment of record high oil prices. This entails an unrelenting focus on reducing costs in all areas."

The corporation is committed in 2006 to deliver its business plan including continued expansion of the new business model and improved cost and productivity through process re-design and technological enhancements. To further enhance the efficiencies resulting from the transition to the new ACE business model and in view of the difficult fuel cost environment, ACE companies will now proceed with the reduction of non-unionized staffing levels by 20 percent.

"The decision to reduce jobs is never easy," said Mr. Milton. "However, it is necessary in this cost environment as we advance with the implementation of our business model which removes the layers of complexity that existed at the previous legacy airline." The management and other non- unionized staff reductions are expected to take place primarily at Air Canada, Air Canada Cargo, Air Canada Ground Handling Services (ACGHS) and ACTS in the first half of 2006.